Two dire themes pervaded high technology in 2002: economic fear and paranoia over security.

The first--caused by the industry's inability to recover from the national recession and the dot-com meltdown--led some major companies to turn on themselves, creating internal animosities that often rose to the level of chief executive. No sector was immune to this epidemic, which was felt in such diverse areas as computer hardware, broadband Internet service and online content and Java.

In this hostile climate, even partners were viewed with suspicion. Contracts that had been routinely signed in previous years were subjected to new scrutiny, and for good reason: Large software manufacturers such as Oracle had become the center of controversies involving inflated deals, and cash-strapped customers were on high alert for anything that smacked of overcharging.

Eventually, of course, the true enemy was the competition--and, more often than not for most companies, that meant Microsoft. As old rivals such as Sun Microsystems continued their perennial assaults on the software behemoth, new competitors of all sizes began identifying new vulnerabilities to exploit in the Redmond, Wash., empire.

To survive the economic squeeze, companies began adopting controversial tactics that sometimes backfired. Spam reached alarming levels across the Internet, for example, and companies desperate to increase revenue began "piggybacking" technologies along with free software downloads to track consumer behavior. Microsoft too was forced to look for painful new solutions, even if they threatened to undermine long-standing Windows strategies.

All of this gloom in the U.S. technology industry, however, meant opportunity for at least one country on the other side of the world. As companies everywhere looked for new markets and labor forces to manufacture their products as cheaply as possible, China emerged as a global leader in technology, both as a consumer and producer.

Yet even China could not escape the other major issue of the year: security. In the first full calendar year after the Sept. 11 attacks, security was understandably a heightened concern for the high-tech industry, as it was for the rest of society. Hacking became a major preoccupation with many companies and governments, whether it involved such consumer activity as online banking or new trends such as wireless networks.

Hackers themselves began some soul-searching, trying to draw ethical boundaries in a world increasingly intolerant of any security breach that could be exploited by criminals, especially terrorists. Nevertheless, the threat of cyberterrorism remains far more remote than the hype of the mainstream news media.

AT&T's dual role in spotlight
Ma Bell's falling out with the now-defunct broadband service, which eventually resulted in the creation of a competing AT&T network, has raised difficult questions about uneasy boardroom alliances that are increasingly common as industries consolidate.

Spam flood forces desperate measures
Spam is as old as the mainstream Internet itself, but its alarming rise is challenging companies more than ever. The pace is driving companies to take desperate measures that in some cases are creating international controversy.

Sun's Java jigsaw puzzle
While Java has revolutionized computer programming in the seven years since it was invented, the technology has posed a puzzle that continues to confound Sun Microsystems today: how to make profits that reflect its wide popularity.

Why hackers are a step ahead of the law
The rising number of high-profile hacking incidents raises an obvious question: Why are hackers able to elude capture so easily? The answer, many say, is an elite class of criminals far more technologically sophisticated than most law enforcement officials.

Passwords: The weakest link?
Fortune 100 corporations, small companies and even Internet service providers with strong security have an Achilles heel: people who pick easily guessable passwords. Today's computers often can guess a good number of passwords in less than a minute.

Your PC's enemy within
The Wild West days of cyberspace are over, and it's time for government to change its laissez-faire attitude toward the Internet and create laws that clearly prevent unscrupulous businesses from preying on unsuspecting consumers and seizing control of computers.

Spotting red flags in large software contracts
Customers devote little scrutiny to contracts that are rife with obscure terminology, vague expansion charges and mind-boggling licenses. In interviews with CNET News.com, analysts and consultants offer important advice to avoid hugely expensive mistakes.

Lights, camera, legislation
Hollywood is paranoid of being "Napsterized"--shorthand for the effect that digital file-sharing has had on the music industry. As tech companies stake their futures on digital entertainment, the studios are mustering all their strength to control use of their work.

How real is e-terrorism threat?
Despite a rising tide of doomsday predictions, security experts, network managers and public safety officials say privately that the threat of cyberterrorism has been overblown and misunderstood--and that physical attacks remain far easier to carry out.

A mortal Microsoft
The economy, strategic miscalculations and general wariness after the government's antitrust case have led to a psychological shift against Microsoft. Rivals and customers are sensing opportunities to challenge the empire after decades of presumed invincibility.